Community

Improvement Service Fund imposed on developers to balance development in Petaling Jaya

DEVELOPERS involved in the construction of houses as well as commercial and infrastructure development in Petaling Jaya have to contribute a fee to offset the impact the new development has on the area.

Mayor Datin Paduka Alinah Ahmad said the money was channelled to an Improvement Service Fund (ISF) to enable the Petaling Jaya City Council (MBPJ) to improve basic amenities such as roads.

“PJ is very different now, with major redevelopment plans
taking place. Owners of individual commercial lots want to build high-rise buildings and this adds to problems such as increased traffic congestion.

“Our aim in having the ISF is to address the impact this new
development will have. We cannot stop development but we can
scale it down to harmonise with the surroundings. MBPJ weighs all consequences in giving approval for new developments,” she said.

Alinah added that most developers understood the need for the ISF to address the impact on traffic, drainage and other public amenities.

Put to good use: Slope strengthening works being carried out at Bukit Gasing using monies from the ISF.

Some developers have termed the ISF a “setback” as they claim it has a negative impact.

One developer said “It is extra cost because for every apartment unit above RM100,000, MBPJ levies a tax of RM500 and all this is transferred to the buyer.”

Alinah said, “This is not a tax and we have to impose this fee on the developer to offset the additional expenses caused by the development.”

On Jan 20, StarMetro reported there would be no hike in PJ’s assessment rate or valuation this year, but the council was looking at other ways to increase revenue to upkeep the city, including through the ISF which was introduced in 2010 but only activated last year.

Here are excerpts from the interview with Alinah.

What is ISF and is it lawful to impose such a fee?

ISF or Improvement Service Fund is a financial account that can be utilised for infrastructure works and the fee is imposed on developers under Section 132 of the Road, Drainage and Building 1974 (Act 133).

What is the aim of the fund?

The fund is used to activate swift action without using ratepayers’ money. In the case of upgrading Jalan Tanjung and the junction of Jalan Tropicana and Jalan Lebuh Bandar Utama, it was done using money from the fund.

Who contributes to the fund?

Developers. Until now, 74 developers have contributed to the fund and the total amount collected was RM30.5mil, where RM17.4mil has been utilised for better traffic enhancement strategies, upgrading of roads and strengthening the slopes of Bukit Gasing, just to name a few.

What is the method of contribution to this fund?

ISF fees are reasonable as each unit of a house that is priced below RM100,000 is charged RM250, while those priced above RM100,000 are charged RM500. Developers will be told of the ISF fees as soon as the application for development is submitted.

First stage — 20% of the total fees must be settled before the building plan is approved.

Second stage — 40% of the total fees must be settled before the earthworks plan is approved.

Third stage — 40% of the total fee must be settled before the road and drainage plans are approved.

Do ISF fees apply to building low-cost housing, places of worship and government schools?

Government schools and low-cost housing (below RM42,000) are exempted from ISF fees. Churches, mosques and other places of worship as well as halls for religious purposes are exempted. Redevelopment and refurbishment of these buildings are also exempted.

Who are the administrators of the fund?

The ISF is a trust account. Administrators of the fund are known as the Trust Account Committee and its members are made up of the mayor who is the chairman, the deputy mayor as deputy chairman, director of the council’s Treasury, as well as the Legal Department and Engineering Department directors.

What are the terms under which the Trust Account are managed?

All in the committee members are accountable and the cashflow is managed under the Trust Account Treasury regulations.

Does this ISF account have a timeframe?

Yes. Once this account achieves its objective, it will be closed. The balance cash in the account will be credited as MBPJ’s revenue unless there is fineprint in the agreement that the monies be returned to the contributors, in this case, the developer.

How many Trust Accounts are there?

MBPJ has opened nine Trust Accounts to organise the flow of monies.

They are:

·Construction of the Persiaran Surian and Persiaran Mahogany interchange;

·Upgrading of the Kampung Kayu Ara infrastructure;

·Construction of the Rothmans roundabout and Jalan Harapan;

·Construction of a ramp and tunnel from PJU 1A crossing North Klang Valley Expressway near the Football Association of Selangor;

·Upgrading of Jalan Tanjung;

·Upgrading of the Tropicana Tunnel;

·Upgrading of the Jalan Penchala and Jalan Utara one-way loop.

·Upgrading of Section 13 infrastructure

·Strengthening the slopes of Bukit Gasing

How were all these projects carried out?

Our engineers handled each project in stages based on the fees collected from the developers. Each project was tailor-made to the fund’s purpose.

Most were to improve transportation to accommodate increased traffic due to new development projects. These include the construction of major roads, sidewalks and bus shelters.